Many startups make the mistake of forming a company without seeking the advice of an attorney. For example, if you come up with a great idea, are working on a new technology platform, or decide to start selling a new product, it is easy to go online and follow the steps to incorporate your own business. You can do so by simply filling out some forms, filing them, and paying the fee. While it may seem tempting to go the “easy route,” the easy route is not always the best course of action, especially when it comes to your startup. Failing to consult with an attorney to get the right guidance in the beginning can lead to a significant financial loss in the future.
Reasons to Speak with a Startup Lawyer
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The percentage of ownership must be clearly outlined
Partnerships, like marriages, have no guarantee of lasting or ending amicably. This makes it critical to establish who owns what percentage of the company from the very beginning, while also making provisions for how each partner’s shares could be altered in the future. For example, if the company were to issue more shares for a capital raise, how would that impact the shares owned by the founding members? Will the founding members be required to put up additional capital? Would everyone be impacted in the same way? These are issues that must be addressed before these situations arise.
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Determining the type of company based on tax implications
It is wise to speak with an experienced and reputable startup lawyer in Los Angeles to determine the type of company that you should establish and to learn how your decision will impact the way that the company (and you as a founder) are taxed.
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The rights of each founding member must be clearly outlined
As companies grow, founding members are often pushed out by the board of directors or investors. This is a risk that all founders face so it is critical that you work with an attorney to draft documents protecting your interests.
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An attorney can help to mitigate your exposure
Regardless of the type of industry you are in, it is wise to work with an attorney that can assess any areas of risk, ensure that you are in compliance with local, state, and federal laws, and identify potential pitfalls.
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You can prevent certain legal disputes
The best way to handle a legal dispute is to prevent one from happening in the first place. By working with a startup lawyer, all of your business incorporation documents and contracts can be drafted in such a way as to address potential complications and to ensure that the legal provisions governing them are clear and unambiguous.
Speak with a trusted Startup Lawyer Today
Protect yourself, your company, and your financial future by speaking with an experienced business attorney prior to your official launch. If you have already passed that point, time is of the essence for ensuring that your time and investment is well protected.
For further information or to schedule an appointment with the experienced and reputable Afshin Hakim of Hakim Law Group, leading business law firm in Los Angeles, please call 310.993.2203 or visit https://HakimLawGroup.com.
